You Have an Estate Plan. But Is Everything Actually in It?

The Things Nobody Thinks About: Making Sure Your Estate Plan Works in Real Life.

You’ve met with your attorney. You’ve signed your Will and Power of Attorney. Perhaps you’ve even created a Trust. You’ve decided who will receive your property and who will handle your affairs.

So, you’re all set. Right?

Not necessarily.

Signing your estate planning documents is an important step. However, there’s something many people overlook. Does what you own actually match the plan you’ve created?

Having an estate plan is one thing. Making sure it works the way you intended is another.

As we discussed in last week’s article, Your Estate Plan Has a Blind Spot: What Are You Forgetting?, planning involves more than signing documents and keeping records organized.

This week, we’re looking at another important question. Will your property actually pass the way you intended?

Your Will Doesn’t Control Everything

Many people believe their Will determines who receives everything they own. However, some assets pass directly to beneficiaries without going through probate.

For example:

• Life insurance policies generally pay the beneficiaries named on the policy.
• Retirement accounts, such as IRAs and 401(k)s, generally pass to the designated beneficiaries.
• Jointly owned property may pass automatically to the surviving owner, depending on how the property is titled.
• Bank accounts with payable-on-death (POD) designations generally pass directly to the named beneficiaries.

Consider this example.

Five years ago, you updated your Will to divide your estate equally among your three children. However, your life insurance policy still names only one child as the beneficiary.

In most cases, the insurance company will pay that child directly. Your Will generally won’t change that designation.

Your Will and your beneficiary designations may tell two different stories.

Unfortunately, the result may not reflect your wishes.

For more information about what happens after signing a Will, read our article You Have a Will. Now What?.

You Created a Trust. But Did You Fund It?

A Revocable Living Trust can help manage your assets during incapacity. It can also direct how property passes after death and help avoid probate.

However, signing a Trust doesn’t automatically transfer your property into it.

For example, suppose you created a Trust and intended to place your home in it. You signed the documents and put them away for safekeeping.

But did anyone prepare and record a deed transferring your home to the Trustee?

If not, the property may still be in your individual name. As a result, probate could be necessary after your death.

The same issue can arise with bank accounts, investments, and other property.

Attorneys call this process funding your Trust.

Not every asset needs to be placed in a Trust. In fact, some assets may be better handled through beneficiary designations or other arrangements.

The important thing is making sure each asset fits your overall estate plan.

If you’re wondering whether a Will or Trust is appropriate for your situation, visit our Wills and Trusts in Maine page to learn more about the different options.

What About the Maine Camp?

For many Maine families, the family camp holds generations of memories.

Perhaps your parents bought it decades ago. Maybe you inherited it with your siblings. Or perhaps you and your spouse built it together.

You may hope to keep the camp in the family for years to come.

However, have you considered how you actually own the property?

Is the camp in your name alone? Do you own it jointly with your spouse or siblings? Is it held in a Trust or LLC?

These details matter.

For example, property owned jointly with rights of survivorship may pass automatically to the surviving owner. Property owned as tenants in common generally follows a different process.

In addition, inherited property can create unexpected ownership arrangements.

How you own your property can be just as important as what your estate planning documents say.

When Did You Last Check Your Beneficiaries?

Life changes. People marry, divorce, have children, and lose loved ones. Relationships and priorities also change over time.

Unfortunately, beneficiary designations don’t always keep up.

Think about a retirement account you opened 20 years ago.

You probably named a beneficiary when you opened it. But have you reviewed that choice recently?

Ask yourself:

• Is this still the person I want to receive the account?
• What happens if that person dies before me?
• Have I named a contingent beneficiary?
• Does this designation match my current estate plan?

Reviewing beneficiaries is especially important after major life events.

For example, divorce can affect beneficiary rights under certain laws. However, you shouldn’t assume that every designation automatically changes.

Instead, review your accounts and confirm that your choices still reflect your wishes.

Our article What If Your Estate Planning Documents Are Outdated? explains why major life changes should prompt a review of your estate plan.

Estate Planning Is More Than Signing Documents

A good estate plan does more than explain who should receive your property. It also considers how that property will actually transfer.

Your Will, Trust, deeds, account ownership, and beneficiary designations should work together.

Of course, not every asset needs the same approach.

The goal is to understand how everything fits together. As your life changes, your estate plan may need adjustments, too.

One Important Question to Ask Yourself

During Estate Planning Awareness Month, consider this question:

If you passed away tomorrow, would your property actually go where you think it would?

You don’t need to know every answer today.

However, you can start by reviewing how your property is titled. Check your beneficiary designations and confirm whether your Trust has been properly funded.

These simple steps can help you identify potential problems before they become bigger issues.

At Aging In Maine, we believe estate planning should do more than look good on paper. It should work in real life.

Because the goal isn’t simply to have an estate plan. It’s to have one that accomplishes what you intended.

Ready to Take a Closer Look at Your Estate Plan?

Whether you created your estate plan recently or signed your documents years ago, it may be time to make sure everything still works together.

Aging In Maine helps individuals and families throughout Maine create and review estate plans that reflect their property, wishes, and long-term goals.

Contact Aging In Maine at (207) 848-5600 to schedule a consultation.

This article is intended for general educational purposes and does not constitute legal advice. Individual circumstances and applicable laws may affect estate planning decisions.